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A.Valcke
A.Valcke, Solicitor
Category: European Law
Satisfied Customers: 731
Experience:  14+ years experience // Masters in EU Law
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We are looking to terminate a contract (we believe with cause).

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We are looking to terminate a contract (we believe with cause). Service provider argues that it is without cause. Where can we go from here?
Submitted: 1 year ago.
Category: European Law
Expert:  Fran-mod replied 1 year ago.
I'm Fran, and I’m a moderator for this topic.

We have been working with the professionals to try to help you with your question. Sometimes it may take a bit of time to find the right fit. I was checking to see if you had already found your answer or if you still needing assistance from one of the professionals.

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Customer: replied 1 year ago.

I am still waiting for an answer.

Expert:  Fran-mod replied 1 year ago.
Thank you. I will search for a European Law professional for you.
Expert:  A.Valcke replied 1 year ago.
Hello,

Thank you for your question.

Please could you provide further information on the service, terms of the agreement and the reasons you wish to terminate the agreement.

I look forward to your response.
Customer: replied 1 year ago.

We entered into a colocation agreement in 2012, and were provided (and signed) nothing other than a Service Order which outlined the services and their costs. There have been 3 power outages since then, each of which has resulted in the destruction of equipment owned by us. Our service term expires March 2014. We requested contract termination with cause, effective December 1. The service provider responded that we do not have cause, and are subject to the "termination without cause" clauses of their Master Service Agreement (which we have never seen, and certainly did not sign), and is demanding an early termination fee of $7,800 (which is equal to the remaining balance of the service term from December 1 though March 1). We feel that the continual power issues and failure to resolve them, which have directly resulted in loss of equipment (approximately $1,400), is sufficient grounds for termination with cause.

Expert:  A.Valcke replied 1 year ago.
I'm sorry, but please could you explain in more detail what you mean by a "colocation agreement".

It would help me know what services are supposed to be provided to you by the other party under the "Services Order".

Also, what does the agreement state in terms of termination?

Does it specify what country's laws apply?

I look forward to hearing from you.
Customer: replied 1 year ago.

Colocation refers to computer hardware (in this case: servers) being housed in a facility operated by a service provider.


 


The service order simply lists the amount of electricity, bandwidth, and physical space they are to provide, as well as the length of the contract.


 


We do not have a copy of the Master Services Agreement they are citing as example (we have never seen it).


 


The Service Provider is in USA, and we are in Sweden.


 


Below, find a copy of what we were provided when we requested termination of our contract.


 


 


Thank you for contacting [redacted]. This is confirmation of receipt regarding your request to terminate colocation services at [redacted] prior to the expiration of the term of your contract . Below, I have included section 10.3 of our Master Services Agreement, which outlines the terms under which early termination of your services will be handled:


 


10.3 Termination without cause. Customer may, at their discretion, elect to terminate this agreement without cause at any time by providing written notice to the [redacted] billing department a minimum of thirty (30) days prior to the expiration or automatic renewal of this agreement. Early termination of this agreement is subject to payment of an early termination penalty as follows:


 


(a) If less than three (3) months remain prior to the next renewal term as outlined in Section 2.2, customer agrees to pay an early termination penalty equal to the remaining monthly recurring charges as outlined on the relevant Service Order;


 


(b) If greater than three (3) but less than six (6) months remain prior to the next renewal term as outlined in Section 2.2, customer agrees to pay an early termination penalty equal to 3 times the regular monthly recurring charges as outlined on the relevant Service Order;


 


(c) If greater than six (6) months remain prior to the next renewal term as outlined in Section 2.2, customer agrees to pay an early termination penalty equal to 50% of the remaining monthly recurring charges as outlined on the relevant Service Order;


 


All early termination penalty charges will become due and payable immediately upon acknowledgement of Customer’s early termination request by [redacted]. [redacted] may, at their sole discretion, require customer to execute a Settlement Agreement, Non-Disparagement Agreement and Mutual Release of Claims prior as a condition of accepting Customer’s early termination request.


 


Based on the terms above, the total amount of your early termination penalty would be as follows:


 


Effective Termination Date: November 30, 2013


Early Termination Penalty: $7800.00


 


If you have any questions regarding this matter, please contact us. If you would like to proceed with early termination of your agreement, please confirm the effective date for termination, and we will start drawing up the appropriate forms.

Expert:  A.Valcke replied 1 year ago.
Thank you for that information.

I would suggest that you first write back to request a copy of the Master Services Agreement.

When you receive this, you will then be able to know whether you may be able to terminate for cause for their inability to comply with the Services Order. The MSA will also tell you which law applies to the agreement, which is important to know in case the MSA is silent regarding the issue of breach of contract. You can then send me further details of what's in the agreement.

I'm sorry if I can't give you further details on what to do, but this is not really possible to do without knowing what's in the agreement.

I hope this answers your questions for now.

Kind regards

A. Valcke
A.Valcke, Solicitor
Category: European Law
Satisfied Customers: 731
Experience: 14+ years experience // Masters in EU Law
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